Delhi also urged people to work from home and banned non-essential trucks from entering the capital as doctors said the number of children with respiratory issues in hospital jumped threefold.
India's capital has shut schools and coal plants as it battles dangerous levels of air pollution in the region that has also left Lahore in neighbouring Pakistan choking on acrid smog.
In an order passed late Tuesday, Delhi's Commission for Air Quality Management said all education institutions should remain shut until further notice.
Delhi also ordered the closure until the end of the month of six of 11 coal-fired power plants surrounding the metropolis in a bid to tackle the filthy air.
The Indian capital of 20 million people has also urged people to work from home, while banning non-essential trucks from entering the city in an effort to clean the smog.
"Anti-smog guns" – which spray mist into the air – and water sprinklers were ordered to operate at pollution hotspots at least three times a day.
The commission also said that at least half of government workers were being sent home and private firms should follow suit.
Hospitals are seeing a sharp increase in the number of children with respiratory complaints, raising concern among parents and doctors about their health in the short and long term.
Numbers have jumped threefold in the past seven to 10 days, according to Arvind Bountra, head of paediatrics at Max Super Speciality Hospital.
The order came days after the Delhi government pushed back against a call by India's Supreme Court to declare the city's first "pollution lockdown", which would restrict the population to their homes.
Lahore's PM2.5 at dangerous levels
In neighbouring Pakistan, the city of Lahore in Punjab province near the border with India was ranked the most polluted city in the world on Wednesday by a Swiss air quality monitor.
By evening the air above the city of 11 million had cleared slightly.
But levels of PM2.5 – the smallest and most harmful particles polluting the air – were still at 118 micrograms per cubic metre, nearly eight times the WHO's daily recommended maximum.
"Children are experiencing breathing diseases ... for God's sake, find a solution," labourer Muhammad Saeed said.
In recent years, Lahore residents have built their own purifiers and filed lawsuits against government officials in desperate bids to clean the air.
But authorities have been slow to act, blaming the smog on India or claiming the figures are exaggerated.
Air quality has worsened across northern India and adjacent parts of Pakistan in recent years, as industrial pollutants, smoke from seasonal crop burn-off, and colder winter temperatures coalesce into toxic smog.
Delhi and Lahore are consistently ranked the world's worst capital for air quality, with levels of pollutants in the Indian capital last week reaching more than 30 times the maximum limit recommended by the World Health Organization.